All Forum Posts by: Timothy Metra

I still don't know what to do... if it helps, I'd like to acquire rentals to replace my income from my not so stable job so I can make enough to do real estate full time. My goal is $3k/mo.

I work as a contractor (temp) but the pay is good. My job is expected to last at least 3 years. It could potentially become permanent, but I'm not into putting that thought into my head for the moment.

I'm debating on one of the two situations:

1.) Buy a nice (possibly new) mobile/manufactured home in cash. This would take about 1.5 years of savings. Something modest, but I have a lot of construction experience and can add onto the home to raise the value minimally. I know mobile homes drop in value easily, but they stay relatively the same in my market. I work a lot, I'm super clean, and the additions would at least hold the value. I could get 5 acres and a mobile home in cash for about $50,000 total in 1.5 years. My lease ends in 6 mos.

2.) Just rent and save the $50,000. Continue to rent, and save and save. My monthly expenses are about $1,500 a month. I could easily save about $70,000 in 3 years, but I would like to make enough residual income on the side of my job to not have to stay here the whole 3 years.

Any suggestions?

@Jenifer Levini thanks for clarifying. I'm not looking to do anything fishy at all, I would just like to have the ultimate protection through my LLC's. I wouldn't want a domino effect from one going wrong.

Hi, @Jenifer Levini. I understand the concept of an LLC being a completely separate entity, like a person itself. My only concern is if something were to happen to one of my LLC's, would the others be liable? As an example, I own an apartment complex LLC 1 worth $100,000. I get sued for $500,000. Will the insufficient funds of LLC 1 be reimbursed through LLC 2 and 3? Like let's say Donald Trump opens a new LLC tomorrow. He obviously has more money than he puts into that LLC, but gets sued, causing that LLC to go bankrupt. The person suing wouldn't be able to obtain money from his other LLC's, could they? I know it seems like a ridiculous question, but I would think that's the advantage the wealthy use. I mean, if I own 10 houses in separate LLC's and one house completely fails, my other 9 houses shoudln't be at risk! If I own Coca-Cola and Taco Bell and Taco Bell goes bankrupt, debtors can't come after my Coke money, can they? I'm obviously horrible with examples but hopefully I explained that well enough. I would just like to have the ultimate protection if one of my entities were to have the worst happen.

@Jace Holt those were just hypothetical numbers and scenarios. I currently don't own any real estate.

@Tom S., well I was assuming that once a company has a lot of equitable assets that the company could guarantee the loan themselves. Like let's say I own Tim's Real Estate and it has $200M in equity, but I want to use the bank's money to build an apartment complex. I would assume the bank could use my company as a guarantor for the money, not me. That's obviously a drastic example, but still. I don't feel like the bank should put me at personal risk if my LLC is worth enough persay. This was a future idea, not one from the get-go.

@Andrew Clifton I'm ultimately going to speak with my attorney, I was just curious as of now. I don't have any investments thus far, I just like to know plans for down the road. I'd like to know "okay, now it's about time to put my next couple investments into a separate LLC before this one is worth too much"

@Tom S., I would like to live personally debt free and have all my debts ran through my company if that makes sense. I live in a home now that's paid off and my car is paid off but over time I'd like to upgrade homes into something nicer of course. My current debts are about $600/mo and that's about half of a one week paycheck.

As far as my debt is concerned, for example... it would be like, I want to use the bank's money to buy a multi-fam. Bank gives me a loan after I put 20% of my own money down. Total monthly cost for all expenses are $2,000 a month. I make $3,000 a month. So I pay the bank what they're due and keep the $1,000 per month.

So technically my LLC is in debt to the bank. I do understand it's a lot harder that way, probably for these very reasons. Hopefully it's not impossible though? But my worst fear is leveraging my debt well, having a lot of liquid assets, but the market collapsing and the bank bankrupting my LLC and taking my home.

* newb question 

This may seem like a new question, but I couldn't find a specific answer on older posts. Sorry if I missed it.

Anyways, if I have 3 separate LLC's and one fails, will the other 2 be protected?

Example:

LLC 1: Worth $45,000 of assets

LLC 2: Worth $200,000 of assets

LLC 3: Worth $150,000 of assets

LLC 1 is sued heavily. Are LLC 2 and 3 completely protected since they're separate assets?

And another question while I'm posting...

Let's say I own a $250,000 home, nice luxury cars, and have plenty of money in the bank. All my LLC's are leveraged on the bank's money. I take a lot of cash flow from my multi-families and pay off my own personal items with the abundance of cash I have, since I'm so rich. *laughs* I'm completely up to date on my pay periods and all, just using the extra cash flow to pay off my personal home and whatnot. Then I get into a situation like Dave Ramsey. $4M worth of assets, owing $3M. So my net worth is about $1M. Reminder, house paid for and all. Then the banks call all their notes and I'm stuck in a situation like Ramsey was.

If all my assets are set through separate LLC's like I described above, will my personal assets be protected if worse comes to worst?

I'm asking because I would like to live practically debt free and use the bank's money (mostly) for my investment purposes. I know I have to put some skin in the game and all, but I'd like to leverage with the bank's money, not my own. What would happen to me in this given situation via the market collapsing?